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Wednesday, 17 March 21
MARKET INSIGHT - INTERMODAL
 Shipping market players are familiar with the inverse correlation between the freight market and demolition activity i.e. when the market picks up we usually observe demolition activity declining and vice versa, while the level of scrapping eventually contributes to a new market equilibrium.
In order for demolition activity to be impacted in either direction, market expectations for the medium term have to be aligned with actual freight market conditions and thus demolition activity reacts with some time lag to the current freight market environment. The decision to sell a vessel for scrap is not only driven by the state of the market cycle and expectations, but to a great extent by the offered scrap price at the time vs the price fetched at the 2nd hand market.
As we stand, owners of vintage tonnage are obviously trying to exploit the current sound performance across all Dry Bulk & Container segments and prefer to keep their vessels for further trading rather than turning to beach yards. Despite positive market conditions in these two segments, possible demolition candidates could be those old units that have to be docked for surveys and their Owners are not in favor of bearing this cost, or the parties that are looking for a fleet renewal. Still, in order to make the demolition decision tempting for them, scrap prices should rise further. Already, scrap prices have risen more than 10% since the beginning of the year, and are up more than 29% compared to last year.
So far during Q1 2021, the freight market and expectations in the Dry Bulk & containers segment have been extremely optimistic, whilst the wet market is still to recover from the severe downturn experienced as a result of oil supply cuts and soft demand amid the ongoing COVID-19 pandemic. YTD dry bulk scrapping rate in dwt terms is estimated -21% below the same period last year, while tankers scrapping is estimated +91.1% y-o-y.
However, taking a closer look at the tankers sold for scrap, we would expect that the current market conditions (with VLCC rates suppressed since the beginning of the year and recently turning negative) would favor the larger crude carriers towards scrap yards. Instead, since the beginning of the year, about 11 vessels were confirmed to be scrapped with half of them being Handysize or MR tankers, while the rest consist mainly of Aframax, two shuttle tankers and no VLCCs.
We could argue that maybe owners of the larger crude tankers have enough buffer from last year’s stellar earnings amid floating storage economics skyrocketing and thus can sustain adverse market conditions, but also expect that the market will turn a corner should OPEC+ reverses oil supply cuts in the next months. We could also argue that owners prefer to sell their vessels in the 2nd hand market, as the premium they are currently getting over selling them for scrap is quite substantial.
While scrap prices are expected to rise further during the 2H of the year amid increased demand for scrap restocking, it remains to be seen how all of the above factors will impact demolition activity across the different shipping segments, with expectations for tanker scrapping activity increasing nonetheless coming in higher.
By George Kallianiotis,
Valuation Department
Compiled by:
Intermodal Research & Valuations
Analysts:
Ms Eva Tzima
Mr.George Panagopoulos
Disclaimer and legal disclosure: For any further queries please do not hesitate to contact our Research & Valuations Department. The information contained in this report has been obtained from various sources, as reported in the market. Intermodal Shipbrokers Co. believes such information to be factual and reliable without making guarantees regarding its accuracy or completeness. Whilst every care has been taken in the production of the above review, no liability can be accepted for any loss or damage incurred in any way whatsoever by any person who may seek to rely on the information and views contained in this material. This report is being produced for the internal use of the intended recipients only and no reproducing is allowed, without the prior written authorization of Intermodal Shipbrokers Co.
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Wednesday, 13 January 21
COAL TO BE BIGGEST CONTRIBUTOR TO INDIA'S $5 TRILLION ECONOMY: AMIT SHAH - BUSINESS STANDARD
The Centre on Monday awarded the letter of allocation to successful bidders of coal mines under the commercial auction held during October-November ...
Monday, 11 January 21
MUTED COAL RECOVERY IN 2021 - BALTIC EXCHANGE
Coal demand is expected to rebound in 2021
Medium-term outlook is less favourable although demand declines are expected to be subtle ...
Sunday, 10 January 21
KOREAN GENCOS INVITED BIDS FOR TOTAL 880,000 TONS OF COAL FOR MARCH 2021 LOADING
COALspot.com: Korea South-East Power Co., Ltd. (KOEN), on behalf of EWP, KOSPO, KOSEP and KOWEPO issued an international tender for total 880 ...
Friday, 08 January 21
INDIA COULD COMPETE AGAINST CHINA IN SOLAR MODULE PRODUCTION WITH THE RIGHT GOVERNMENT SUPPORT - IEEFA
The focus should be on helping manufacturers become globally competitive
Although one of the top 10 solar module producers in the world, India ...
Thursday, 07 January 21
FITCH FORECASTS DOUBLING IN ASIAN WIND, SOLAR CAPACITY BY 2029, TOPPING 1,500GW
Despite some near-term delays due to the Covid-19 pandemic, solar power and offshore wind will drive steep growth in non-hydro renewables in Asia, ...
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- Meralco Power Generation, Philippines
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- Ministry of Transport, Egypt
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- Grasim Industreis Ltd - India
- Formosa Plastics Group - Taiwan
- Minerals Council of Australia
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- Price Waterhouse Coopers - Russia
- Economic Council, Georgia
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- Xindia Steels Limited - India
- AsiaOL BioFuels Corp., Philippines
- Ministry of Finance - Indonesia
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- The University of Queensland
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- Bukit Makmur.PT - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Uttam Galva Steels Limited - India
- VISA Power Limited - India
- Madhucon Powers Ltd - India
- SMG Consultants - Indonesia
- Antam Resourcindo - Indonesia
- Global Coal Blending Company Limited - Australia
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- Bhoruka Overseas - Indonesia
- White Energy Company Limited
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- GVK Power & Infra Limited - India
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- The Treasury - Australian Government
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- Semirara Mining Corp, Philippines
- Karaikal Port Pvt Ltd - India
- McConnell Dowell - Australia
- Mintek Dendrill Indonesia
- Eastern Coal Council - USA
- The State Trading Corporation of India Ltd
- European Bulk Services B.V. - Netherlands
- Africa Commodities Group - South Africa
- Manunggal Multi Energi - Indonesia
- Ind-Barath Power Infra Limited - India
- Attock Cement Pakistan Limited
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- Indonesian Coal Mining Association
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- Kumho Petrochemical, South Korea
- Medco Energi Mining Internasional
- Bulk Trading Sa - Switzerland
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- Therma Luzon, Inc, Philippines
- Wood Mackenzie - Singapore
- Energy Link Ltd, New Zealand
- Orica Mining Services - Indonesia
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- Toyota Tsusho Corporation, Japan
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